Trading, Accounts & Prohibited ActsQuestion 201 of 398
What happens to a standard stop order once the market reaches the stop price?
a.It is automatically canceled
b.It becomes a limit order at the stop price
c.It becomes a market order and is executed at the next available price
d.It is held until the end of the trading day before executing
Explanation
A plain stop order is a trigger: once the stock trades at or through the stop price, the order becomes a market order and executes at the best available price. This guarantees execution but not a specific price, so it may fill worse than the stop in a fast market.
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